The competition watchdog has called for farm sector comment about animal health company Elanco's offer to sell off a sheep lice treatment line after the US giant's $US7.6 billion takeover of the animal health division of Bayer.
The planned Bayer acquisition, which is yet to be fully approved by regulators internationally, would double the size of Elanco's business, creating the world's second biggest animal health company.
Much of its strength will be in companion animal products, but both companies have strong positions in the farm livestock market, too.
The Australian Competition and Consumer Commission has "preliminary competition concerns" about worming treatments commonly used for cats and dogs because the takeover would combine ownership of Elanco's Milbemax and Interceptor brands with Bayer's Drontal, Profender and Droncit brands.
The ACCC has also noted preliminary concerns about the consolidation of the two company's sheep lice products.
Bayer's sheep lice lines include Avenge, Piranha and Viper, which currently compete with Elanco's Extinosad.
A proposed divestment undertaking would see Elanco selling off the Drontal, Profender and Droncit worming brands, and Bayer's Avenge+Fly sheep lice brand to purchasers approved by the ACCC.
"The release of the proposed divestment undertaking for public comment should not be interpreted as a signal that the ACCC will ultimately accept the undertaking and clear the transaction," warned ACCC deputy chairman Mick Keogh.
He said any individual or company wishing to make a submission about Elanco's divestment options should do so by June 10.
"We are seeking feedback from industry participants on whether the divestment package will be sufficient to address any competition concerns arising from the proposed acquisition," he said
"We are following our usual practice of publicly consulting on a proposed divestment package."
The ACCC needed to understand if market participants believed the proposed sell-off would alleviate competition concerns around sheep lice treatments or in the companion animal market.
Both Bayer and Elanco produce a wide range of animal health products in Australia, including cattle tick prevention lines and various parasiticides for companion and production animals.
Neither company has manufacturing facilities based in Australia.
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